Yale unlikely to pay taxes for same-sex couples

After a Yale accounting error hit employees who rely on domestic benefits for same-sex couples, LGBT activists are calling on the University to level the playing field.

Yale failed to withhold income used to cover the federal tax on domestic partner health coverage for same-sex couples from approximately 60 employees in 2010. Now, the University is making up the difference by subtracting the funds from those employees’ 2011 salaries. Administrators say Yale has no plans to retroactively pay the taxes owed by employees — a decision that has sparked anger among workers — and no plans to introduce a pay raise to offset the value of the tax during a period of increased financial cutbacks.

It remains unclear why the affected workers did not realize their paychecks were consistently greater than normal in 2010. University workers enjoyed a “Benefits Holiday” in December 2009, when Yale suspended benefits deductions for the month. One University employee, who spoke anonymously to protect her professional relationship with Yale, said her income that month was higher than usual because of the holiday. She said she subsequently saw no significant jump in pay between December 2009 and January 2010.

The employee added that paycheck stubs were only issued on paper until fall 2010, when the University transitioned to an electronic format. The paper copies, she said, were “cryptic” to read.

In the wake of Yale’s payroll error, the Human Rights Campaign, the nation’s largest civil rights group that advocates for LGBT equality, has called for the University to amend its repayment plan for employees, absorb the cost of the mistake, and cover the domestic benefits tax in future years.

A small number of companies nationwide — including Facebook, Google, and the Bill & Melinda Gates Foundation — have taken a stand against a federal policy that taxes health benefits for same-sex couples regardless of their legal marriage status in Connecticut and other states. These companies offset the value of the domestic benefits tax through a process known as “grossing up,” or increasing salaries so that employees can pay the extra tax without reducing their income.

Yale is not among these organizations, and few universities have instituted such a policy. Syracuse University became the first higher educational institution to begin “grossing up” salaries for same-sex employee couples in March 2010.

“Because other companies are doing it I feel that [Yale] could very well follow suit and perhaps become a forerunner in terms of educational institutions starting the practice,” said Carolyn Caizzi, who works in the Haas Family Arts Library and was one of the employees affected by the accounting mistake. “Because this error happened in the payroll, I feel like it’s a prime opportunity for [Yale] to seize the moment and basically just right a wrong.”

Ninety-nine percent of organizations across the private and public sectors do not “gross up” pay for employees in same-sex couples, and most do not provide domestic partner health coverage, Vice President for Human Resources and Administration Michael Peel said in an e-mail Wednesday.

“Yale has benefit coverages for LGBTQ employees that are among the most progressive in the nation,” Peel said. “We review our benefits periodically, but we have no current plans to pay the federal taxes owed by employees for the benefits provided.”

Provost Peter Salovey said Yale’s $68 million budget deficit would make it difficult for the University to cover its employees’ domestic benefit taxes. To balance the budget for the 2011–’12 academic year, both academic and non-academic units will be asked to make further cuts, Salovey and University President Richard Levin told faculty and staff earlier this month.

In light of Yale’s financial concerns, Salovey said the University’s best course of action would be to speak out about the federal tax policy.

“I think the most effective approach Yale can take is to act consistently with the law while speaking out about its unfairness and the need for change,” he said.

According to the HRC, 11 for-profit employers have implemented a “grossing up” policy as of January.

Comments

b

Sometimes leadership calls for doing what is right, regardless of the difficulty. I’d love to see the numbers on this – what would the total cost to Yale be? Make that known, and then let people suggest ways to cover that cost. I can think of several things already.

BPJ

No word on the cost to Yale, and this is the first time any Yale official has addressed the unfairness of this discriminatory law. For employees, doubling the tax penalty can mean paying an additional $500/month for the next year. Who can afford that?

harbinger

Yale screwed up my taxes, but I pay attention and caught their mistake after a few months. I didn’t see anyone demanding the difference in my taxes be paid by the university. If you can’t figure out your own taxes and payroll, maybe you should partake of the remedial math courses at Gateway.

BPJ

@harbinger: For gay employees, our pay stubs are a riddle of inconsistent codes, additions, and deductions. Even people will professional accountants can’t figure it out. Try asking payroll for help decoding it, it takes them days to research their own process. But thanks for the extra dose of elitism. We get it. You’re better than us on many levels.

meret

“Yale has benefit coverages for LGBTQ employees that are among the most progressive in the nation,” Peel said.

If it’s morally required to do something, and immoral not to, is it relevant whether the moral choice is considered “progressive,” and do you deserve praise for approaching it? Apart from this particular situation, or even from Yale’s concrete policies more generally, it seems there’s a fundamental problem with the perspective of at least one of the people in charge of implementing them.

harbinger

@BPJ- Everyones stub is a mismash of financial quackery when it comes to taxes. You seem to be hinting that as a gay employee, your stub has codes that would make the NSA jealous. You already know you’re stub will be a problem, how hard is it to give it a bit of extra scrutiny? I guess being self reliant is elitist, and seems to bruise your feelings. Hopefully the University will correct the problem, and if you’re lucky offer daily life planning and grocery lists for our less elite community members.

BPJ

@meret Agreed. At the heart of this issue is the inability of those in power, although well-intentioned, to assume the perspective of a minority group facing legislated discrimination. It’s one thing to talk about bigotry in theory, but quite another to experience it first-hand.

BPJ

@harbinger – It costs an estimated $57 million dollars a year for companies to simply deal with the payroll issues associated with the “gay tax”. It’s more complicated than you think. Maybe you should make a gay friend and ask them about it.

BTW, did your tax “screw up” have anything to do with your ethnicity/race/sex/gender/age? You’re missing the point entirely.

d

As a C&T who has been effected by this, I must comment on the sentence “It remains unclear why the affected workers did not realize their paychecks were consistently greater than normal in 2010.”
Our payroll went from bi-weekly to weekly, so when that change occurred, I thought that with the change, my tax amounts were calculated differently, and hey…it’s YALE, they should know better than me what my tax deductions should be! Next time, yes, I will absolutely question ANY change in my paycheck since my confidence is now very low (with the payroll department), and I will be paying for their error for the next year…